Rep. Méndez: Tax reform crucial for small & midsize businesses

Rep. Carlos “Johnny” Méndez Nuñez

By THE STAR STAFF

Faced with the news that commercial bankruptcies on the island increased by 21.8% last year, the New Progressive Party (NPP) minority leader in the House of Representatives, Carlos “Johnny” Méndez Nuñez, insisted Sunday that any tax reform also has to reduce the burden on small and medium-size enterprises (SMEs) so that they can compete in an increasingly intertwined economy.

“Puerto Rico’s economy is intertwined, with crossties, which means businesses, particularly SMEs, depend on each other to maintain capital generation,” the lawmaker said. “In the four-year period from 2013 to 2016 these businesses suffered an avalanche of taxes that did not allow their growth and, in many cases, led to their closure. Since 2017 we have fought to do justice to our SMEs, lowering the tax burden so that they can do business faster, more quickly and effectively. That is why any reform of the Internal Revenue Code has to have reductions for these merchants.”

Since 2021, the former House speaker has pushed for comprehensive tax reform for individuals and corporations, including SMEs.

According to the most recent data, trade bankruptcies in 2022 numbered 251, an increase of 21.8% over the 2021 figure of 206. That represents the largest increase over the past six years, Méndez Nuñez noted. The value of those bankruptcies was $290 million, an increase of 115.9% compared to the previous year.

“Since the second quarter of 2019, we have been in a position to provide money to the people, through tax relief, and the [Financial] Oversight [and Management] Board has not wanted to,” the NPP minority leader said. “Today, the collections of the Treasury Department for 2022 exceeded $2.5 billion, about $460.3 million more (21.7%) than reflected in the Fiscal Plan. With these resources we can provide real tax reform, the first in 13 years (since 2010), to taxpayers, including SMEs.”